CITIC Limited Half-Year Report 2020

Except for iron ore, the prices of commodities related to the Group’s business dropped significantly due to shrinking downstream demand. CITIC Resources turned from profit to loss year-on-year owing to the drop in both sales volumes and prices for its products including crude oil, and a decrease in share of profits from equity investments. CITIC Metal Group reported a profit of HK$695 million, representing an increase of 18% year-on-year, mainly due to gains from the transfer of its 20% equity interest in China Platinum. However, its share of profit from investments in mines such as the Las Bambas copper mine in Peru and the niobium mine in Brazil decreased, and the trading business recorded a decrease in profit due to the drop in sales volumes and prices of niobium and sales volumes of iron ore. CITIC Pacific Energy’s profit decreased by 49% to HK$352 million, mainly due to lower sales volumes of coal from its investment in Xin Julong coal mine. The Sino Iron Project continued to deliver profits reflecting an increase in sales volumes, relatively high iron ore prices and ongoing cost controls. Manufacturing: The manufacturing business recorded a profit attributable to ordinary shareholders of HK$2,809 million in the first half of 2020, representing a year-on-year decrease of HK$705 million, or 20%. Of that profit, 14% was attributable to the dilution of its equity interest in CITIC Dicastal and CITIC Pacific Special Steel. Affected by reduced downstream orders due to the pandemic, sales volumes of CITIC Dicastal’s aluminium wheels and castings decreased year-on-year, leading to a drop in profit of 45% to RMB276 million. Efforts to expand the domestic market and make up for the shortfall in overseas orders helped domestic sales of aluminium wheels return to its pre-pandemic level in May. Cost reductions and measures to enhance efficiency, including continuous optimisation of the production process and reductions in procurement costs, enabled CITIC Pacific Special Steel to mitigate the impact of the drop in steel prices. It realised a profit of RMB2,749 million for the review period, which was basically flat as compared with the same period last year, highlighting its ability to withstand a downturn. By strengthening its marketing efforts, CITIC Heavy Industries recorded an increase in new orders of 48% year-on- year during the first half of 2020, which is a five-year high. This contributed to a profit rise of 77% year-on-year to RMB169 million. Engineering contracting: The engineering contracting business recorded a profit attributable to ordinary shareholders of HK$380 million in the first half of 2020, representing a year-on-year decrease of HK$323 million, or 46%. The profit of CITIC Construction decreased by 49% year on year to RMB252 million. Delayed progress in its domestic projects was eased after the resumption of work, but the continuation of the pandemic slowed construction on its overseas projects. However, the company seized the opportunity presented by the government’s counter-cyclical control policies, allowing it to increase the number of new contracts in the first half of the year by 66% year-on- year. As CITIC Engineering’s business is mainly concentrated in Hubei Province, the progress of its projects was greatly affected by the pandemic, and its profit fell 55% year on year to RMB128 million. Real Estate: The real estate business recorded a profit attributable to ordinary shareholders of HK$3,528 million in the first half of 2020, which was basically the same as last year. This was mainly due to the increase in settlement of CITIC Coast New Town project in Shantou compared with the previous year, while real estate development projects such as Kadooria project in Hong Kong owned by CITIC Pacific Properties recorded a year-on-year decrease in recognition. 11 Half-Year Report 2020 CITIC Limited